President-elect Donald Trump’s nominee for labor secretary, Andy Puzder, CEO of CKE Restaurants and subsidiaries Carl’s Jr. and Hardee’s, could pave the way toward business deregulation.
While there are many layers to his appointment, Puzder has taken strong anti-labor stances, long decrying California’s minimum wage policy and other regulations that he claims have driven businesses out of the state. Puzder is, in fact, in the process of moving CKE’s headquarters from Carpinteria to income-tax-free Nashville, Tenn.
“Gov. Jerry Brown had promised to address the problem that everyone in the state’s business side talks about in overregulation. Maybe this could be a potential avenue of agreement between California and the federal level,” said Herb Gooch, a political science professor at California Lutheran University. “It’s a longshot but it could spur collaboration.”
The head of CKE has been outspoken in his opposition of California’s onerous business environment, including its new overtime labor rules and minimum wage increases. The polarizing figure aligns with the rest of Trump’s other appointments, said Bruce Anticouni of Anticouni and Associates.
“His appointment is consistent with the rest of his Cabinet, which in my opinion does not reflect favorably on employee rights,” said Anticouni, who has taken on several cases involving Carl’s Jr. “He could affect minimum wage legislation, overtime compensation and the appointments to the National Labor Relations Board, which can shift the relationship with union management.”
The Department of Labor’s mandate to sharply raise the level for overtime exemption to $47,476 a year will likely be reduced, said Jonathan Fraser Light of LightGabler. A federal judge issued an injunction that blocked the rule that was slated to take effect in December.
In his blog, Puzder claimed that California’s strict business regulations and high taxes have stifled economic growth. The Affordable Care Act is increasing labor costs while rising premiums reduce discretionary incomes, he said.
That being said, Puzder’s impact on a statewide and regional level will likely be minimal, sources said.
“Whatever the feds do to ease the burden on employers, California will hold the trump card because if the California regulations give more favor to the employees, that’s what employers are stuck with,” Light said. Employers that can move are doing so, Light added, saying that four of his clients have left the tax-heavy California for other states.
Puzder also noted that minimum wage hikes are leading to more automation. He prefers an earned income tax credit over minimum wage, a program that supplements incomes of the working poor.
As they earn more, government aid declines, but never to the point where it reduces their total income, Puzder wrote.
“Things would be much better across our economy if government regulators would back off,” he wrote in his blog.
The earned-income tax credit could appeal to both the left and right, said Michael Latner, Cal Poly San Luis Obispo associate professor of political science and director of the Master of Public Policy Program.
“It’s important we begin having discussion on earned income tax credit, which is less partisan than the minimum wage debate,” he said. “People who do business in California understand the diversity of consequences from statewide policies, which can hurt certain regions and benefit others.”
The short-term consequences of a Puzder labor secretary will be bad for labor and opposed by unions, Latner said. But there is a silver lining in that when there is someone who is so polarizing, there is opportunity to find some common ground, he said.
California is so completely at odds with Trump that it may be smart to get someone from the state in his Cabinet who understands California and how dependent it is on agriculture, water and trade, Gooch said. It could be setting the table for a protracted legal battle, he said.
“The chances are there will be a lot of sparks with offshore drilling,” Gooch said. “Where the tire hits the cement is in the potential to contract out drilling and timber extraction on public land. No one necessarily benefits if there is four or eight more years of legal hassles and turmoil, and California is rich and powerful enough to create trouble in regard to environmental and labor laws.”
Regardless of his views on policy, Puzder joining the Cabinet would be a momentous benchmark for the tri-county region, said Joshua Geffon of Stradling Yocca Carlson & Rauth.
“This is extraordinary. Having someone in the President’s Cabinet from our community is a significant development,” he said.
• Contact Alex Kacik at [email protected]